Wall Street Traders Go All In For Poker

Dec. 7, 2009— -- As poker stars go, Burt Boutin isn't the best known. Still, the player nicknamed "Red Bull Burt" has won more than $2 million in World Series of Poker tournaments and has been a regular face on ESPN's featured tables.

Although it's not like this full-time Las Vegas resident doesn't have a regular job. He does: Professional money manager.

Boutin could, if he chose to, trade slow days tracking S&P blue chips in exchange for fast nights amassing chips at the tables. But he's not giving up his day job.

"I get burned out playing poker," Boutin, 42, admits. "It gets old – but the stock market is constantly challenging me."

In recent years, the financial industry and high-stakes professional poker realms have been increasingly intersecting, with a number of Wall Street figures crossing over into the WSOP scene. Online poker's popularity, meanwhile, has exploded into a $10 billion-plus industry despite government measures to curb Internet gambling.

Poker playing may well be today what day trading was in the 1990s. On any given day, at any given moment, hundreds of thousands of players are glued to their computer screens competing on virtual tables. "PokerStars" and "Full Tilt" are two of the more popular sites featuring more than 60,000 combined games between them that run nonstop and cost between $10 and $200 to buy into.

Online poker is extremely popular among Wall Street types.

"Poker is a trader's game," says Scott Redler, cofounder of T3, a Manhattan-based day trading firm. "Roulette, blackjack, those are based more on luck. But with a game like No Limit Texas Hold 'Em, you need patience and discipline, or in other words the exact same skills needed to be a good trader."

Boutin, a Philadelphia native, started out as a stock broker in the 1990s and made his way to the Las Vegas poker circuit in 2001.

"He's a sharp guy and a good card player but it was surprising to see how quickly he made it into the upper echelon of that world," says Burt's younger brother, Clinton Boutin, a financial consultant based in New York City.

The older Boutin began to snag some coveted WSOP event bracelets (awarded to winners of the many various poker tournament events that are affiliated with the WSOP beyond the signature $10,000 No-Limit Texas Hold 'Em Main Event) right around the time national interest in poker, in particular Texas Hold 'Em, began to surge.

The popularity of the 1998 movie "Rounders" coupled with ESPN's decision a few years later to regularly televise Vegas poker beyond the annual WSOP Main Event, transformed the game from smoky back rooms to a worldwide phenomenon.

Along the way, celebrity players, such as Johnny Chan, became household names. Chris Moneymaker, an online player, won the main WSOP event championship in 2003, giving hope to regular guys on home computer players everywhere.

"It's just gotten unbelievably competitive," Boutin says of the professional Vegas poker scene.

An exploding poker scene has created a whole new subculture in Vegas and in turn helped grow Boutin's other enterprise, managing money. His firm, Securities Services, has around $50 million in assets under advisory on behalf of some high-net worth clients, including several professional card players. Boutin, who employs three other financial reps besides himself, has a value-oriented trading style, leaning toward distressed companies coming out of bankruptcy.

Lately, he's had a lot of those to choose from. Boutin also says that during the worst period of the 2008 financial meltdown he was making money hand over fist shorting financials.

"Both pursuits are about calculating risk," Boutin says. "But playing poker professionally can be exhausting – sometimes you just go and go all night. It takes a toll." (He's known for gulping Red Bull -- hence his moniker).

The skill sets of a trader or portfolio manager match up well with those required to compete in poker – a penchant for risk taking and a dispassionate regard for large sums of money.

A New York City securities industry recruiting firm, The Options Group, recently was asked by an unnamed hedge fund to find candidates proficient at online poker, no financial experience needed. Daytrading titan Steve Schonfeld is also known to consider card playing savvy when evaluating new trading candidates.

In general, money managers have tended to distance what it is they do from gambling, insisting that stock selection is far less a crap shoot than, say, shooting craps. This is particularly so, it is widely believed in the industry, if there's some form of a research-driven edge.

It's recognized even among gamblers that only a small percentage of them can consistently turn a profit. However, poker enthusiasts can be sensitive to perceptions that chance more than skill underpins what they do. And as the M.I.T. students featured in Ben Mezrich's book "Bringing Down the House" showed, there is an edge to be had at some games when a little intellectual firepower is brought to bear.

A Wall Street background can be an edge in the high-stakes poker circles.

Steven Begleiter, a Bear Stearns trader prior to the firm's demise, pulled down $1.6 million earlier this year when he finished in sixth place in the main WSOP event. Hedge fund heavyweight David Einhorn, who famously shorted Lehman Brothers into oblivion last summer, finished 18th in 2006. Aaron Brown, who works as a risk manager at mammoth Greenwich, Connecticut hedge fund AQR, was a former professional poker player.

"If you love trading, if you are good at it, then odds are you also love poker," says one Wall Street trader who enjoys playing in live games. "In the same way, if some young kid proves themselves really adept at playing poker online where it has become so competitive then chances are he might be well suited for becoming a trader."

In New York City, there's an unofficial Wall Street poker circuit, an ongoing series of semi regular games held almost every night of the week attended mainly by bank and hedge fund traders.

Taking risk and assessing information quickly are elements of both trading and poker playing. Before a trader moves on a stock he might have to weigh the last trade, insider purchases or sale, a rumor on the Street, a news story, and so on within minutes or seconds. A skilled card player, similarly, looks at the odds of his hand being the winner, his opponents' prior hands and actions, his last bet and the look on an opponent's face.

Of course, playing online, where reading a face is impossible, requires a distinctly different approach, says one online poker enthusiast.

"Playing online poker is all about paying attention to the betting patterns of the people you are playing, and you get to know them by their alias," says Lee, a 42-year-old Manhattan real estate agent.

Having worked as a Catskills cabana boy growing up, Lee was around poker from a young age. But in 2004 Lee says he began to play nightly and on weekends to supplement his income (and because, he admits, is hooked). While he doesn't consider himself a pro he does view poker as a "part time job," and claims to pull down, in a good month, $3,000, with his worst month ever costing him $500.

Lee says he plays on PokerStars, mainly at $50 tables, accruing enough to buy into the nightly $100,000 tournament that carries a $162 buy in. Lee has played in PokerStars' weekly "Sunday Million" Sunday night game, once placing 200th out of around 8,000 people.

"Online poker is something anyone can do so it has become super, super competitive," one trader explains. "Trading is harder to break into. Anyone with a computer can get into online poker."

Says Boutin, "The way to get good at poker is just to play, constantly."

And to be a good money manager?

"You have to be able to take risk."